Article 16 of the Saudi Privatization Law
المادة 16 من نظام التخصيص
Privatization contracts are concluded in the government's name, with the executing entity representing it, and only with a private party. A body with public legal personality may not contract with the government as a private party.
Official text (Arabic)
This article has not been amended since the law was issued.
1- تُبرم العقود الخاضعة لأحكام النظام باسم الحكومة، وتُعدّ الجهة التنفيذية مُمثلًا للحكومة في كل ما يرتبط بالعقد وأي عقد تابع، ما لم ينص قرار الموافقة على توقيع العقد أو العقد التابع على غير ذلك.
2- لا يُبرم عقد بموجب أحكام النظام إلّا مع طرف خاص، ولا يجوز لأي جهة لها الصفة الاعتبارية العامة أن تتعاقد مع الحكومة بصفتها طرفًا خاصًّا.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 16 explained in plain English
This article determines the two parties to a privatization contract:
First: the government side.
- Contracts subject to the Law are concluded in the name of the government, not in the name of the government entity itself.
- The executing entity is considered the government's representative in everything connected with the contract and any subsidiary contract.
- The exception: where the decision approving the signing of the contract or subsidiary contract provides otherwise.
Second: the other side.
- No contract is concluded under the Law except with a private party, which under Article 1 is a person with private legal personality.
- No body with public legal personality, such as public authorities and institutions, may contract with the government as a private party.
The reason is that privatization is based on involving the private sector, so it would make no sense for the government to contract with itself under the name of privatization.
It is followed by Article 17, which provides that a contract concluded without the competent authority's approval is void.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 16 of the Saudi Privatization Law
In whose name is a privatization contract concluded?
It is concluded in the government's name, and the executing entity represents it unless the decision approving signing provides otherwise.
Can a government authority be a private party in a privatization contract?
No. No body with public legal personality may contract with the government as a private party.
More articles on Concluding and Financing a Privatization Contract
- Article 17
No government entity may conclude a privatization contract without the competent authority's approval, and a contract concluded in breach is void unless the competent authority ratifies it.
لا يجوز لأي جهة حكومية إبرام عقد تخصيص دون الحصول على موافقة الجهة المختصة، ويقع باطلًا كل عقد تم إبرامه بالمخالفة لذلك، ما لم تجزه الجهة المختصة.
- Article 18
With written approval from the contracting authority, the private party may take financing and mortgage its own project assets, but may never sell or mortgage State-owned assets.
1- يجوز للطرف الخاص بعد الحصول على موافقة مكتوبة من الجهة التنفيذية ما يأتي: أ- إبرام عقود تمويل للأعمال والخدمات محل مشروع التخصيص مع جهة مصرفية، أو تمويلية، ع
- Article 19
At the private party's request and with the competent authority's approval, the contracting authority issues a certificate confirming that the competent authority approved the contract and that it and its documents are subject to the Law.
تُقدّم الجهة التنفيذية -بموافقة الجهة المختصة- بناءً على طلب الطرف الخاص شهادة له تتضمن ما يأتي: 1- أن الجهة المختصة وافقت على العقد، أو العقد التابع. 2- أن الع
- Article 25
A partnership contract may not be assigned without written approval from the contracting authority, while subcontracting is allowed and the private party remains directly responsible.
1- لا يجوز للطرف الخاص التنازل كليًّا أو جزئيًّا عن عقد الشراكة بين القطاعين العام والخاص -أو العقد التابع- للغير إلّا بعد الحصول على موافقة مكتوبة من الجهة الت
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.